Don’t Miss Out on This Credit for College Costs
The American Opportunity Credit is worth up to $2,500 per student for each of the first four years of college.
My son is a junior in college, and I pay his tuition. Can I take the American Opportunity Credit when I file my 2013 taxes?
Yes, as long as you meet the income requirements and your son was enrolled at least half-time for one academic period during the year in a program leading to a degree, certificate or other recognized educational credential. To qualify for the American Opportunity Credit, your adjusted gross income for 2013 must have been less than $180,000 if you’re married filing jointly or less than $90,000 if you’re single or filing as head of household, and you must claim your son as a dependent on your tax return.
The credit was scheduled to expire at the end of 2012, but Congress extended it through 2017. It is worth up to $2,500 per student for each of the first four years of college. It is calculated as 100% of the first $2,000 you pay for eligible expenses, plus 25% of the next $2,000 of eligible expenses. Eligible expenses include tuition, fees and books (room and board doesn’t count). It’s a credit, rather than a deduction, which means that it lowers your tax bill dollar- for- dollar. You can claim the credit by filing IRS Form 8863 with your Form 1040. For more information, see the Instructions for Form 8863.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Students who go to school less than half-time or are in graduate school may qualify for the Lifetime Learning Credit, worth up to $2,000 per return if you spend $10,000 or more in eligible expenses for the year. (You can’t claim the Lifetime Learning Credit for the same student in the same year you claim the American Opportunity Credit.) See IRS Publication 970, Tax Benefits for Education, for details.
Because your son is now a junior, you may have qualified for the American Opportunity Credit for his first two years of college, too. If you missed out on the credit in those years, you can file amended returns and get the money back. For more information about amended returns, see the Instructions for Form 1040X.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
-
Take Advantage of National Estate Planning Awareness Week
Is an estate plan something you need? There’s a whole week set aside that says you do.
By Kathryn Pomroy Published
-
Setting Objective Criteria for Employee Bonuses Aligned With Company Goals
When employees win, the company wins.
By Stephen Nalley Published
-
States That Offer a Child Tax Credit in 2024
Child Tax Credit Fifteen states plus the District of Columbia currently offer a child tax credit. Here’s how much you can get.
By Gabriella Cruz-Martínez Last updated
-
Five Ways Your Boss Can Step Up in the Aftermath of a Hurricane
Tax Relief The IRS offers some tax advantages for employers that financially help their employees during federally declared disasters.
By Gabriella Cruz-Martínez Published
-
IRS Sued for Millions Over Employee Retention Credit (ERC) Delays
Tax Credits The pandemic-era tax refunds for businesses have been a contention point for the agency, now employers are fighting for their cash.
By Gabriella Cruz-Martínez Last updated
-
Election 2024 Childcare Debate: Harris-Walz vs. Trump-Vance Plans
Election As Election Day approaches, the Republican and Democratic tickets present different ideas for childcare and family tax credits. Here's what to know.
By Gabriella Cruz-Martínez Published
-
Does Kansas Tax Social Security Benefits?
Social Security The Sunflower State’s new tax package will have a widespread impact on retirees and young families. Here’s what you can expect.
By Gabriella Cruz-Martínez Last updated
-
Will EVs Drive the Vote in Election 2024 Swing States?
Tax Credits Electric vehicle tax credits have somehow become controversial. So car buyer attitudes in swing states might make a difference.
By Kate Schubel Last updated
-
Changes to Estate Tax Are Coming... Six Options Congress Could Take
The Tax Letter An important estate tax change is looming. Here are six ways that Congress might address estate taxes in 2025.
By Joy Taylor Published
-
Only Five States Offer No Sales Tax
State Tax Is your state’s ban on sales tax actually saving you money? Probably not as much as you might think.
By Gabriella Cruz-Martínez Published